Oil falls, gold looks for direction

Oil prices slip even as gas prices soar

Natural gas prices in Europe have understandably spiked in the aftermath of Russia's decision to cut off Poland and Bulgaria. Suddenly the market is forced to price in the Kremlin taking similar action against much larger customers, having decided that the threat of Europe imposing the embargo was low given certain resistance. With the Kremlin putting itself in a position where it must apply the same punishment to all if they don't comply, Europe may find itself without Russian gas or looking weak.

Oil prices have continued to slip despite the ramp-up in tensions between the EU and Russia. Chinese lockdowns have helped ease some of the upward pressure on crude prices in recent weeks which is offsetting the hit to Russian supply as a result of sanctions. Still, it remains above USD 100 and it's hard to imagine the price falling significantly below against the backdrop of such uncertainty and an inability of OPEC+ to hit targets.

Has the market really lost its appetite for gold?

It's been a strange month for gold which rallied towards USD 2,000 on seemingly little before plunging back below USD 1,900 on very little as well. The spike in volatility has left the yellow metal not far from where it was for much of March. I find it very hard to believe that the appetite for gold is waning given the immense uncertainty and inflationary pressures that still exist. A break below USD 1,880 may suggest otherwise.

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